Implications of Canadian Contribution in Roth 401k

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nelsona
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Re: Implications of Canadian Contribution in Roth 401k

Post by nelsona »

That is for someone who leaves Canada and doesn't come back, doesn;t take CERB, etc. They can begin being a US resident when they leave and stay away, and subsequently meet SPT in a reasonable time. You have to at some point meet one of the US definitions of tax resident, which I don't believe you have, until at the earliest Jan 2021 (assuming you were living physically in US on that date).
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johnnyappleseed
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Joined: Fri Sep 04, 2020 10:20 pm

Re: Implications of Canadian Contribution in Roth 401k

Post by johnnyappleseed »

Yeah, so I think I've resigned myself to that reality. The question then becomes what to do with my backdated Roth IRA contribution that I made in 2021 for 2020, i.e. do I ask the trustee to do a recharacterization to a Traditional IRA or do I leave it be since it won't be an issue? Additionally, is it fine to keep contributing to my Roth 401k, which I started doing in Summer 2020 while working in the US, or do I need to immediately stop contributing and possibly take the 10% withdrawal penalty?
nelsona
Posts: 17153
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Implications of Canadian Contribution in Roth 401k

Post by nelsona »

Remember that a Cdn contribution only "hurts" you when you are a Cdn resident. You aren't taxed in canada on your Roth even if you did previously make a Cdn contribution, if you are a non-resident.

Personally, If my intention is to amass a large Roth over my US career and then return to Canada, I would do whatever my 401(k) trustee allows me to do to eliminate the Roth portion asap, if at all possible, while in US. Once that is done, start a fresh Roth401(k) from scratch
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
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